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Daily news and analysis about the food tech revolution

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With $6.6B in Sales, Online Grocery Hit Another Record in May

The global pandemic and subsequent lockdowns around the country spurred another record month for online grocery shopping. According to a results from a new Brick Meets Click/Mercatus Grocery Survey released today, online grocery sales hit $6.6 billion in May, up 24 percent from April (which was a record month as well).

The online survey was conducted from May 20 – 22 with more than 1,700 US adults, and showed total online grocery orders grew 18 percent month-over-month to 73.5 million in May, up from 62.5 million in April. In the press announcement, Brick Meets Click said that this increase was driven by increased capacity as retailers added more time slots for fulfilling orders to keep up with demand.

The number of households ordering groceries online increased as well, with 33 percent (roughly 43 million customers) saying that they shopped for groceries online during the previous 30-day period, up slightly from 31 percent in April.

Households also increased the number of orders placed and their total spend per order in May. Households placed an average of 1.7 orders for either delivery or pickup, up 10 percent from 1.6 orders in April. And the average order was $90, up $5 from April. Brick Meets Click attributed the spend increase to higher consumer prices that started in April, improvements to product availability and customers getting more comfortable with online grocery shopping.

Despite all that growth and record setting, the question remains as to how permanent these new behaviors are. States are starting to ease their social distancing restrictions, allowing people to be out and about more freely. And Bloomberg reported on a McKinsey survey yesterday that showed 7 in 10 people still shopped at the grocery store during the pandemic. As Bloomberg noted, online grocery still suffers from clunky ordering processes, entrenched habits and the fact that people are fussy and like to pick their own produce.

Given the relaxations of lockdowns, it’s unlikely we’ll see another record month for June. Rather, we should anticipate a drop. How big of one, we’ll have to wait and see.

Technomic Survey: Three in Ten Consumers to Eat Out Less Amid COVID-19 Fears

Even as the outbreak of coronavirus/COVID-19 continues to evolve and grow, we still don’t have a clear idea of exactly how much it will fundamentally change our entrenched, traditional behaviors. Are handshakes a thing of the past? Is working from home the new normal? Will we travel less for both work and fun?

While we can only wait to discover the answers to those bigger questions, a whitepaper from Technomic this week outlines some of the more immediate ways COVID-19 is impacting consumer behavior as it relates to how we get our food.

Technomic surveyed 1,000 consumers between Feb. 28 and March 2 and found “more than three in 10 consumers say they plan on leaving the house less often, not go to restaurants as often or not order food or beverages at away-from-home venues as often.” Additionally, of those refraining to eat out, “31 percent say that decreased frequency will last for between one and three months.”

Image via Technomic.

This isn’t great news for full-service restaurants, which are already having to work harder to attract foot traffic as off-premises grows more and more popular.

You might think this decrease in on-premise eating would translate into a wave of delivery orders from restaurants, but Technomic found that of people eating out less, only 13 percent think they will order more restaurant delivery because of the outbreak.

Technomic is quick to point out that there are still a lot of unknowns when it comes to the virus’ spread, so it’s too soon to tell exactly what its full impact will be. However, the survey does point out a couple of areas where the food industry could face the biggest impacts.

On the negative side, as alluded to earlier, Technomic says on-premise dining at restaurants could face the biggest downturn as people hole up at home and avoid crowds.

And while it’s weird to think of an “upside” to a global pandemic, Technomic rightly points that that if people do refrain from sitting in a restaurant to eat, drive-thrus and delivery restaurants (think: pizza) could become more popular.

Additionally, supermarkets, which have already seen a surge in panic shopping, could also see their foodservice items benefit as people grab meals while grocery shopping.

And while they don’t mention it specifically, an increase in food delivery could bring with it a boom in ghost kitchens and virtual restaurants as restaurant brands look to pare down their physical footprint and infrastructure costs.

We’ve been chronicling how COVID-19’s spread is already altering how the food industry does business — whether it’s food conferences being canceled, reducing human-to-human contact with delivery, using robots to deliver food, or Kickstarter projects being delayed.

But when it comes to this outbreak, there’s not a whole lot we can do but wait (and wash our hands!). Technomic’s survey certainly won’t be the last word as this crisis evolves, but at least it provides some numbers to help businesses prepare.

Nielsen: Move Into Retail Making Moola for Meal Kits

The move into retail has been a smart one for the meal kit industry, as the new sales channel helped drive meal kit growth in 2018, according to a report out this week from Nielsen (h/t Grocery Dive).

Overall, Nielsen found that meal kit users (both online and offline) have increased 36 percent throughout 2018 and that 14.3 million households purchased meal kits in the last six months of 2018 (up from 3.8 million household from the end of 2017). And Nielsen says there’s more room to grow, with 23 percent of American households saying they would consider purchasing a meal kit within the next six months.

Nielsen points out that the majority of meal kit sales still happened online in 2018, but growth came from in-store sales, which makes sense as meal kits made their debut in grocery aisles last year: Kroger purchased Home Chef, Albertsons rolled out Plated meal kits, and HelloFresh made a deal with Giant and Stop & Shop. Nielsen says that 187 new meal kit items were introduced at retail outlets last year, and that in-store meal kit sales generated $93 million over the course of 2018 with the number of in-store meal kit purchasers increasing by 2.2 million households in less than a year. This jump accounted for a 60 percent growth in meal kit users.

So who’s buying meal kits? In a blog post, Nielsen writes:

Overall, affluent consumers earning an income of more than $100k drove meal kit growth across online and in-store in 2018. Compared to 2017, these consumers increased their online meal kit purchases by 6 points and their in-store purchases by 9 points. Across both outlets, growth is also being led by consumers between the ages of 35-44, who showed a 4.3 point increase in meal kit purchases online and a 9.2 point increase in those bought in-store. Meanwhile, meal kit purchases from older consumers aged 45-54 declined 2.8 points online and 7 points in-store over the past year.

We are typically pretty bearish on the future of mail-order meal kits here at The Spoon. A lot of that sourness is driven by our own experiences with the product. Mail-order meal kits are expensive, they generate a lot of packaging waste, they are a lot of work to make, and because the ingredients are fresh, you pretty much have to make them as soon as they arrive (whether you still want that recipe or not) or else they spoil.

Meal kits in grocery stores, however, can still offer the same benefits of meal kits — pre-portioned fresh ingredients, introduction to new types of cuisine — but do it in a way that is more convenient and fits into a consumer’s existing daily flow.

And we’re really just at the beginning of what is possible for meal kits at retail as they only started rolling out last year. There is tons of head room for experimentation and innovation, whether that comes in the form of frozen foods, meal kits sold in new retail outlets like drug stores, offices, or even customized meal kits created in stores and brought out to you curbside so they can be made that night.

Gallup Poll: Grocery Shoppers Prefer In-Store to Online, Shun Meal Kits

A recent poll by Gallup shows that the 84 percent of U.S. adults say they “never” buy groceries online, and 89 percent never order meal kits. By contrast, 81 percent say that they shop for groceries in person at a store at least once a week. (Hat tip: Food Dive)

The Gallup poll reinforces other studies which found that people like to shop for groceries in-store so that they can see and touch them. But it also highlights two trends to watch: meal kits’ continued shift away from mail order, and the transformation of grocery stores into curbside fulfillment centers.

We’ve been skeptics of mail order meal kits for some time, so seeing Gallup’s statistic that 89 percent of respondents never ordering a meal kit isn’t that surprising. Look at the current meal kit landscape: Home Chef is owned by Kroger, Plated is owned by Albertsons, Chef’d abruptly shut down last month, and its assets were purchased to focus on retail. Even stalwarts like Blue Apron and HelloFresh are both rolling out retail strategies.

Part of this is because mail order meal kits deny people the convenience that they want. According to research by Acosta and Technomic, 85 percent of U.S. diners decide what to eat for dinner the day of, which is why placing meal kits in grocery store aisles makes more sense than requiring people to pre-order meals days (or weeks) in advance. People in the grocery store can grab what they want to eat that night — no pre-planning required.

For meal kit companies looking to make the move to retail, however, it might already be too late. As mentioned, Krogers and Albertsons own their own meal kit companies, but they’re far from the only ones: Amazon makes its their own meal kits, Walmart has started to. On a smaller scale, regional grocery stores like New Seasons are getting in on the action, too. There’s only so much grocery shelf space, and a retailer is probably going to promote its own branded kit over a third party’s.

Meanwhile, the in-store shopping experience is going through its own transition. Large grocery stores are starting to be outfitted with robotic micro-fulfillment centers and expanded drive-through pick up options. Alert Innovation is building out such a center for Walmart and Takeoff will announce its first in-store robot operation later this year. These fast, automated centers inside local grocery stores will allow for online grocery order pickup within a half hour to better fit in with people’s busy schedules of errand running or grabbing something on the way home from work.

Additionally, the ability to pick up items in person allows people to inspect their purchases on the spot for quality and freshness — and return something if necessary — while still at the store. They get the convenience of ordering online, the ability to pick up while already out (without having to wait at home for a delivery window), and the power to make adjustments before heading home.

But wait, Gallup said people aren’t buying groceries online. That’s correct… for now! If you look at the demographic break down, 14 percent of adults with children under 18 and 12 percent of adults aged 35 – 54 order groceries online. Compare that to the 8 percent of people 55 and older who buy groceries on the web. And sure, only 9 percent of adults aged 18 – 34 purchase groceries online (they are mostly ordering takeout), but this is a generation being raised on digital convenience.

If these demographic trends hold true, it seems like as though as younger generations age up and start families, the number of people comfortable with ordering groceries online will grow.

With all these changes, I’m looking forward to seeing the same Gallup poll five years from now.

The Smart Home Insiders: Alexa Ruled 2016; AI, Security And Voice Will Define 2017

In December of 2016, NextMarket Insights and The Spoon surveyed a group of smart home industry insiders to ask their opinion about what they thought about the year that was and what they expected in the coming year for the connected home.

Here’s what we found:

Alexa and voice interfaces were the clear winner in 2016.  7 out of 10 respondents said that virtual assistants and voice control were the story of 2016.

While many expect voice and virtual assistants to be important this year, things are not as clear cut. Many believe the defining story of 2017 in smart home will be the growing need for more robust solutions for privacy and security, likely a direct result of the wake up call that was Mirai botnet attack last fall.  Others see machine learning and artificial intelligence as a candidate for the defining trend of 2017, while a smaller number see mesh Wi-Fi and robotics as important but having a lesser impact.

Many saw 2016 as a disappointing year overall in the smart home, with nearly half (49%) feeling the smart home market didn’t meet expectations last year.  Their outlook for 2017 is a more optimistic – if tempered – one. About 39% see the smart home as having a ”great” year this year, while 54% see the market as performing “Ok”, where it will continue to serve mainly early adopters.

When asked what they saw as the biggest hurdle to the adoption of the smart home, the number one choice by our panel of experts was consumer confusion over technologies and products to choose. Other hurdles to broader adoption included lack of a compelling need for consumers to buy smart home products and too much fragmentation in the smart home market.

These concerns about smart home fed our respondents’ wishes for the future of the smart home when we asked them the one overarching goal they’d like to achieve in the smart home in 2017. Tied for the top response was greater consumer understanding about the value of smart home and reduced fragmentation.

Overall, this survey of smart home experts shows an industry at an inflection point, one that has learned some hard lessons about product value and approachability, the need to industry cohesion and standardization and is starting to coalesce around innovative and disruptive new approaches taken by industry leaders such as Amazon and Google.

You can view the report below:

Smart Home Insiders: Virtual Assistants, Not Kitchen, Story Of 2016

It’s unanimous: virtual assistants and voice interfaces were the smart home story of 2016.

That’s what 138 smart home industry executives told NextMarket Insights in a just-completed survey about the state of the smart home. The virtual/voice assistant category, which includes Amazon’s Echo/Alexa products and Google Home, was chosen as the defining story of 2016 by a large margin, with over 2/3 of respondents (68%) picking the category.

A distant second place was “smart front door”, which includes products such as video doorbells and connected locks, which was chosen by 13% percent of respondents. Smart security and mesh Wi-Fi were both 7%.

Smart kitchen was chosen by only 4% of respondents, which is not altogether surprising given the nascent nature of the category as well as it’s focused nature as compared to a horizontally disruptive technology such as virtual assistants. Technologies like Alexa are seen as having a wide across all areas of the smart home, while kitchen tech impacts a focused area (food and eating).

Even more nascent than the smart kitchen was connected commerce, which includes products like the Amazon Dash button. Only 2% saw this category as the defining story of the year.

Data Insight: Do You Use A Mobile Device When You Are Cooking?

One of the biggest changes to happen to the kitchen (and let’s be honest, most aspects of our lives) over the past ten years is the rise of mobile computing.

A decade ago, everyone used flip phones, touch interfaces were the stuff of Tom Cruise movies, and the iPad was just an idea in Steve Jobs’ head.

Today? Mobile computing is everywhere, including the kitchen.

We decided to ask over 1000 households and how often they bring a computing device into the kitchen to find recipes, meal ideas or to learn meal preparation. According to a survey fielded in early August of this year, roughly 7 in 10 bring a computing device into the kitchen to help them cook, with roughly half doing so fairly frequently (a few times a month or more) while 2 in 10 bring a computing device into the kitchen less than once a month.

Figure 2: Use A Computing Devices in Kitchen For Recipes, Meal Ideas, Learn Meal Prep (by Age)

compute-in-kitchen-by-age

Not surprisingly, younger folks are much more likely to use a mobile device or computer in the kitchen as a digital sous chef. Nearly a quarter of those aged 18 to 29 use a phone, tablet or computer in the kitchen to help with cooking once a week or more, while just 10% of those aged sixty or more do so.  All told, 86% of adults under 30 are “digital cooks” while just half of those over can say the same.